(Bloomberg) -- Cotton may sustain record gains into next year as Chinese importers snap up the commodity, according to Evren Kopelman, an analyst at Wells Fargo Securities LLC.
This chart shows how much cotton has soared by using two benchmarks: contract prices on ICE Futures U.S. and Cotlook Ltd.’s worldwide Grade A index, tracking the highest- quality fiber.
Cotton rose last month in ICE trading by 16 percent. The increase represented the best start to a year in more than half a century, according to data compiled by Bloomberg. The Cotlook index advanced 12 percent. Both benchmarks have climbed for six straight months, and have more than doubled.
“Supply should increase given higher prices, but demand will remain strong,” Kopelman wrote yesterday in a report. This means prices may remain elevated until the Northern Hemisphere’s spring season in 2012, she said.
China “continues to aggressively buy at high levels in order to ensure deliver of cotton to meet robust demand,” Kopelman wrote. Export limitations, growing price volatility and a lack of supply are also pushing prices higher, in her view.
Consumers will bear the brunt of the surge rather than cotton mills, which have historically absorbed cost increases, Kopelman said. Jeans with a $12 retail price, she wrote, will have to start selling for $14.50 in order to pass through higher costs for the fiber.
No comments:
Post a Comment